Practice Note 5: Things you Need to Know (Part 1) – Builders Go Bust

I’ve been through the builder going bust on a job process three times now and it’s no fun at all. The first time, there was no sign of anything going wrong on site until the builder simply stopped coming to site. The project was not far from completion but there was a fair bit to do. Tools were left all over the site. Troupes of sub-contractors came knocking on our door to ask if we knew of his whereabouts. The builder clearly owed a lot of people a lot of money. He had just bought himself a new BMW, which at the time struck us as a bit odd but we didn’t say anything. Of course we didn’t know what was coming next. We never heard from him again, which is a pity because we got on well and he was shaping to be a really good small-scale builder.

The second time it happened was a much more drawn out affair with things going slower and slower on site and with work starting to look more and more shoddy. No doubt pride prevented the builder from coming clean with us but eventually we had to terminate the contract and force him off the site.

Third time around, we saw the signs of things not looking good on site and challenged the builder relatively early, he confirmed that he had gone bust and promptly left the site.

All three of theses episodes were very sad affairs. They made me realize how difficult it is to be a good, reliable contractor – and how easy it can be for things to go wrong.

Obviously the issue of how much the architect has certified comes up almost straight away once the builder has gone. But even if the architect has resisted the pressure to over certify, or perhaps has contributed to the contractors problems by under-certifying, the real extra costs only start to make themselves apparent after the builder has gone. Time spent finding a willing new builder and setting them set up on site costs money, as does temporary accommodation or bridging finance that might be required for the clients. The architect’s forward planning for other jobs goes out the window. In the most recent episode, the time taken sorting out the aftermath seriously ate into the time I had planned to look for new work.

I know that the idea is that the architect and/or quantity surveyor should carry out financial checks before putting contractors onto a tender list, but the combination of bad luck and even just a small amount of poor judgment can sink many small businesses – and construction in particular is a very unforgiving business. It would be great if someone could come up with a way of avoiding this – but as far as I know, no one has done it yet.